At least 5,000 bankers will earn more than £1 million this year, according to
the Government's City minister Lord Myners.

He called on major shareholding institutions as well as the trade unions to tackle the issue immediately before it was too late.

His comments came as it emerged that Royal Bank of Scotland intends to pay out bonuses of well over £1 billion to its workers.

Lord Myners' estimate is considerably higher than that given by Sir David Walker, who calculated that over 1,000 City workers were paid more than £1 million a year. Sir David, author of a report into remuneration and corporate governance, said last week that banks should be forced to disclose how many of its staff were paid over £1 million.

Lord Myners, speaking in the House of Lords, said there was "precious little evidence" that people at the top of banks appreciated "the concern about these extraordinary levels of income".

He said: "I would estimate that at least 5,000 people working in the banking industry in the UK will receive, if nothing is done, remuneration in excess of £1 million this year.

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"I think the real responsibility here must lie with the shareholders. Accordingly I have written to the National Association of Pension Funds, the CBI and the TUC urging them to use their influence to persuade trustees to ask their fund mangers: 'What are you doing to stop these quite unreasonable and unjustified levels of remuneration?"'

If his calculations are correct, at least £5 billion will be shared by 5,000 workers.

Lord Myners added: "The decisions about bonuses are going to be made over the next six to eight weeks and it is important our major institutions engage now with the companies and say that 'we will not support grotesque payments and if you persist in paying them we will exercise our votes to remove from the board the people who authorised them'."

His comments came as the head of RBS, the bank which has received £45.5 billion of taxpayers' money, warned that it could lose valuable staff if it could not pay bonuses of over £1 billion.

The Government has insisted on restricting the payment of bonuses to RBS staff, with the Treasury saying it will veto any payment that it considers too high.

But Stephen Hester, the chief executive, told the Scottish Affairs Committee in the House of Commons: “If RBS is unable to retain and motivate staff in any part of RBS it would be very difficult to be successful in our role of making the bank safe, serving the customers, or the taxpayers having any chance of getting their money back.”

It is understood that RBS's board of directors has sought legal advice about whether they can resign in protest at the Treasury taking control of its bonus pool.

Last year RBS paid £900 million of bonuses to staff at its investment bank division and it has indicated to the Treasury that it hopes to pay more this year, because it has generated greater profits this year.